Medicare trustees warn about future solvency of program

A new report from the trustees who oversee the Medicare trust fund projects that the fund will be "wiped out" by 2019. (Source: "Government benefit programs in trouble," Associated Press, March 25, 2008.) While this is the same insolvency date as in last year's report, the trustees warned that financial pressures will begin much sooner when the program begins paying out more in benefits each year than it collects in payroll taxes. For Medicare, this threshold is projected to be reached this year.

As in last year's report, the trustees warn that the President and Congress must deal with this projected shortfall in Medicare taxes. In response to the previous warning, President Bush's most recent budget recommended that "wealthier Medicare beneficiaries pay higher monthly premiums for prescription drug coverage. Under the 2003 law that provided for drug benefits under Medicare, the president is required to submit cost-saving proposals to Congress if the trustees project Medicare will need to rely on general revenue for more than 45 percent of its funding in any future year." However, passage of Bush's recommendations is unlikely due to opposition from the Democratic-controlled Congress.